The Tribune

By NEIL HARTNELL

Tribune Business Editor

nhartnell@tribunemedia.net

The Bahamian Brewery & Beverage Company is seeking a reduction in export tax rates in return for a further $15-$20 million expansion that will create 60-70 additional jobs.

Fred Smith QC, the Callenders & Co attorney and partner, told Tribune Business about the Brewery’s 15-year expansion plan as he lamented the Government’s failure to acknowledge the success of a 100 per cent-owned Bahamian company.

Mr Smith, who is himself an equity investor in the Brewery, told Tribune Business: “It’s extraordinary that the Government talks about Okyanos [Heart Institute] and all these other investments when it ignores the 100 per cent Bahamian investment in Bahamian Brewery.”

Then, disclosing the company’s plans, the outspoken QC said: “We have asked the Government for a concession in future Excise Tax rates on the export of beer from Freeport in consideration of investing another $15-$20 million over the next 15 years.

“We’ve already invested over $30 million, and it’s shocking to me that every time the Prime Minister says something about Freeport he never mentions the Bahamian Brewery.

“We employ 123 people. We are offering to hire an additional 60-70, we have under construction an expanded tourist facility. It’s extraordinary we receive no mention.”

Mr Smith said the reduced Excise Tax rates on exports were being sought so the Grand Bahama-based Brewery could enjoy “the same equal opportunity” as its Bahamian rival, Commonwealth Brewery.

He joined the Bahamian Brewery’s founder, Jimmy Sands, in pointing out that the Heineken and Kalik producer had enjoyed a 20-year “tax-free head start” due to the exclusivity period that prevented any rival brewer from establishing a presence in the Bahamas.

Commonwealth Brewery had also enjoyed a $6 per liquid gallon duty margin spread advantage over imported beer, paying $4 compared to $10, prior to the Bahamian Brewery & Beverage Company’s arrival.

Bahamian Brewery, the Sands, Sands Light, Strong Back Stout, High Rock Lager, Bush Crack Beer and Triple B Malt producer, has long targeted markets such as Florida as niche export destinations for its brands.

Yet ‘tax’ has often been a delicate subject for the company. It was temporarily forced, in 2013, to suspend a planned $1 million, 25,000 square foot expansion of its Freeport premises after the Government floated a plan to increase the duty the Bahamian Brewery paid on its domestic beer sales from $2 per liquid gallon to $3.50.

Apart from imposing a 75 per cent increase in the company’s tax burden, that would also have cut the duty margin advantage it held over Commonwealth Brewery in half.

While the Government ultimately never went through with that plan, allowing the Bahamian Brewery’s expansion to proceed, the episode illustrates the difficulties the company faces in maintaining its existing tax structure - not to mention obtaining further concessions.